With Brazil, Mexico and Colombia leading Venture Capital, the most attractive sectors are e-commerce, Fintech, logistics, health and biotechnology, prop tech, market place, smart cities and mobility.
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The Entrepreneur Capital Funds or Venture Capital are an investment alternative for both small companies and entrepreneurs in the different phases of starting the business. In Latin America they have been gaining ground, especially in Brazil, Mexico and Colombia.
These funds have become one of the most important options for companies that cannot access other types of capital. Figures from LAVCA (Association for Private Capital Investment in Latin America) indicate that since 2016, Venture Capital investments had doubled year after year to reach a record of 4.6 billion at the end of 2019. Although in recent months they recorded a decrease as a result of the impacts of the COVID-19 pandemic.
According to the venture capital fund Wortev Capital , the pandemic affected the entrepreneurial sector in three fundamental aspects:
- Accelerated the reconfiguration of the business model of large and small companies.
- It encouraged them to renew themselves.
- It led them to seek more investment alternatives.
Although Amexcap points out that growth in Latin America was late, both the region and Mexico have “substantial growth ahead.” Along with the growing penetration of digital technologies and the adoption of financial services, the percentage of venture capital investments are growing.
Brazil, Mexico and Colombia are the most prominent players in entrepreneurial capital in Latin America. According to Amexcap, Mexico represents a venture capital opportunity of $ 2.4 billion per year in the average emerging market. This means 3.3 times more than what was registered in 2019.
The five countries with the greatest presence in Venture Capital investments in LATAM are:
- Brazil with 50.5%
- Mexico with 22.7%
- Chile with 9.1%
- Colombia 8.2%
- Argentina 6.6%
“Statistically the main sources of investment for small businesses come from their own savings, private banks, family and friends. Historically, those that receive entrepreneurial capital have a better chance of becoming the companies of the future, the entrepreneurial giants that dictate trends, says Denis Yiris, CEO of Wortev Capital .
Electronic commerce, Fintech, logistics, health and biotechnology, prop tech, market place, smart cities and mobility, are the sectors that are obtaining the greatest benefits from Venture Capital.
Large companies take on the challenges by concentrating efforts and resources to continue operating, however entrepreneurs and small companies need to approach new financing or capitalization alternatives, such as Venture Capital, to invest in innovation, technology and development.
“Mexico requires venture capital to focus more on new ventures and projects that are starting. The support must be both financial and of accompaniment throughout their process and evolution so that these young companies can really stand out and continue their growth so that tomorrow they can be part of the emerging market in the country “, stressed Yris, who also pointed out that Wortev Capital it already implements this dual business model of investment and acceleration.